Holiday expense tracking

The holiday season is a special time. But however you enjoy the holidays, it is important not to forget about your finances.

All those gifts and donations do add up, and you will want to keep a consistent record of your spending.

Here are a few examples of holiday purchases and some of my friendly suggestions for how to account for them in my simple expense tracker.

1. Gifts received

Obviously you want to enter gifts you purchase. But what about gifts you receive from other people? How do you account for that?

Personally, I view the expense tracker as a summary of my spending and my income. So if I receive a gift like a book or a gift card, that really doesn’t fall into either category. So I don’t enter gifts I receive into the expense tracker.

I figure as long as I enter the gifts I buy, then I have an accurate record of my spending. And I’ve noticed the gifts I give away often balance out with gifts I receive, so as long as I enter my spending it somewhat works out.

(It’s a totally different story if you receive a large cash gift, say over $13,000. You might want to jot that down as it can be subject to the gift tax.)

2. Store credit / exchanges

During holiday season the customer service lines are always full with people exchanging and returning gifts. How do you account for the $50 store credit when you returned a gift?

Again, this is a financial event, but it does not fall into the categories of earning money or spending money.

Therefore, just like getting a gift, there is no need to enter store credit/exchanges in the expense tracker. You’re just swapping one purchase for another, so you do not want to double count the original purchase. (Of, if you were exchanging a gift, you didn’t need to enter it to begin with)

3. Mail-in rebates

If you buy something for $15 with a $5 mail-in-rebate, it can be tempting to just enter the purchase as a $10 transaction.

But I would resist that temptation. It takes a long time for some rebates to go through, and you never want to discount your spending. To be honest with yourself, only enter mail-in rebates only when you get the check and deposit it in the bank.

You can enter the rebate as a negative purchase, as I explain in this post about entering rebates into the expense tracker.

4. Tax-deductible donations

If you donate a $100 to your favorite charity, you might end up getting something like $20 back in taxes, so you are effectively spending $80. How should you account the figure in the simple expense tracker?

I think it’s best to enter the entire donation amount. When you get a deduction in taxes, that amount will reduce the entry for “taxes paid” in the next year. You always want to make sure you are actually tracking where your money goes, so it’s safer to enter the entire donation and wait for tax time to get the deduction.

These are just a few of the special holiday scenarios that I face and how I handle them. If you’re curious about how to track another holiday related expense, please share in the comments and I’ll try to give my suggestions.